Middle-Age Adults and Frail Seniors Would Pay More For Medical and Long-Term Care Under The Senate Health Plan

Senate Majority Leader Mitch McConnell’s health care plan would substantially increase costs for people age 50-64 who buy insurance in the individual market and for the frail elderly and younger people with disabilities who receive Medicaid long-term care benefits.  In some ways, the Senate plan would be marginally better than the House-passed health bill. In others, it would be much worse.  But in almost all respects it would fall far short of current law.

Let’s start with individual insurance for middle-aged consumers who are not yet 65 and eligible for Medicare. The McConnell plan, which is now being revised, would make several important changes to the Affordable Care Act (ACA) marketplace subsidies, many of which would directly affect those aged 50-64.

More Expensive Private Insurance

Let’s start with the basic design of his plan. First, it would allow insurance companies to raise their premiums for people aged 50-64 to reflect their higher medical costs.  Then, it would provide tax credits to help reduce the premiums for certain buyers. But for many in the 50-64 group, the credits would fall far short of covering their higher costs.

In general, McConnell’s credits would subsidize individual insurance for those making less than 350 percent of the federal poverty level. This year, that’s $41,580 for singles and $85,050 for a family of four.  That means that fewer consumers would be eligible for credits than today since the ACA provides subsidies for those making up to 400 percent of poverty.

Less Generous Tax Credits

In addition, those credits generally would be less generous than they are today. That’s because they’d be based on a formula linked to the cost of a cheaper insurance policy.  The ACA ties its credits to a policy that covers 70 percent of an enrollee’s medical costs. McConnell would link his subsidies to a plan that covers just 58 percent.  Such a plan would cost less, but require consumers to pay more out-of-pocket.

In the draft Senate plan, the value of those credits would vary by income and age. The more you make, and the older you are, the more you’d have to pay out-of-pocket before you could qualify for a subsidy.

The Kaiser Family Foundation did the math. Take someone age 55-64 making twice the poverty rate or more ($24,120 for a single). Today, to buy a mid-level plan on the ACA health exchange, that consumer would pay an average of $782 per month, or about $9,400-a-year, for a mid-level policy. That’s about twice what she’d pay today.

The reality, of course, is that someone making barely $24,000 is not going to pay almost $10,000 for health insurance. She will buy a low-cost plan that covers few expenses.  Or, most likely, she won’t buy insurance at all unless she is already very sick.

Medicaid Cuts

Then, there is Medicaid, the federal/state program for low-income people, including the frail elderly and younger people with disabilities. Medicaid is the biggest government payer for long-term supports and services, both at home and in nursing facilities. In 2015, it spent about $150 billion, or about 27 percent of its budget, on long-term care.

The McConnell plan, much like the House bill, would fundamentally change the way Medicaid is financed. It would end the ACA’s Medicaid expansion and cap the annual federal contribution to the rest of the program. Today, the federal payment automatically rises to keep up with program costs. In the new plan, it would increase only by a fixed percentage that would be generous to start but much skimpier as time goes one.  In, return, states would get additional flexibility to run their Medicaid programs.

The Most Likely Outcome

The result: Faced with a shrinking federal payment, states would be pushed to run their programs more efficiently.  But McConnell’s plan would slash federal dollars by nearly $800 billion over the next decade, and much more than that in the following ten years. Since no state will be able to find savings of that magnitude, they’ll either have to cut benefits, toughen eligibility standards, shift money from other programs, or raise taxes.

The most likely outcome, however: The frail elderly and younger people with disabilities will receive much less help than they get today. Their families will have to provide more of their care or they simply will not receive the supports they need.

If you are age 50-64 and don’t have insurance through your employer, expect to pay more, a lot more, for health insurance. And if you are receiving Medicaid long-term supports and services, expect to get fewer benefits, or perhaps lose your eligibility entirely, for that safety net program.

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